Reuters Quote: METALS-Copper ends sharply lower amid commods sell-off

Tue Apr 12, 2011 2:55pm EDT


* Copper caught in cross-commodity liquidation

 * Goldman warning triggers commodity rout
 * Japan crisis spurs econ recovery concerns
 * Coming up: U.S. retail sales data on Wednesday
  (Recasts, adds New York dateline/byline, updates with New
York closing copper price, adds graphic and analyst comments)
 By Chris Kelly and Silvia Antonioli
 NEW YORK/LONDON, April 12 (Reuters) - Copper ended Tuesday
with its biggest one-day loss in about five weeks, caught in a
broad-based commodity rout led by a sharp drop in oil and fears
that Japan's nuclear crisis could stall a global recovery.
 Oil traded in New York has surrendered more than 7 percent
of its value in just two days after Goldman Sachs warned for a
second straight day prices in crude oil and other commodities
would fall. For details, see [ID:nN11117735]
 Without the support of a stronger oil price, the legs
holding up this latest commodity rally began to buckle.
 "All of these markets ... aluminum, oil, copper ... all had
big, big runs over the past few weeks. So what we are seeing is
just a sharp pullback," said Adam Sarhan, chief executive of
Sarhan Capital.
 The Reuters-Jefferies CRB index .CRB, a global
commodities benchmark, fell nearly 2 percent in its sharpest
one-day decline in a month.
 "They all took the stairs up, but are now taking the
elevator down. The question is how far down will this elevator
ride go?" Sarhan said.
 London Metal Exchange three-month copper CMCU3 shed $225,
or nearly 2.3 percent, to close at $9,630 a tonne, its largest
daily decline since March 9.
 On Monday, the metal rallied to a 5-week peak at $9,944.75,
just 2.4 percent away from its mid-February record at $10,190.
 COMEX May copper HGK1 fell 7.65 cents to settle at
$4.3835 per lb, near the lower end of its $4.3610 to $4.4750
session range.
 COMEX trading volumes grew to a hefty 65,800 lots by 2:01
p.m. EDT (1801 GMT), nearly two-thirds above the 30-day norm,
according to Thomson Reuters preliminary data.
 "Confidence has taken a hit now," said Alex Heath, head of
base metals at RBC Capital Markets.
 The confidence was also shaken after Japan's economic
minister warned damage wrought by last month's earthquake and
tsunami could be worse than initially thought for the world's
third largest economy. [ID:nL3E7FC092]
 "There is a lot of uncertainty, and whenever there is a lot
of uncertainty about the future and the risks of the unknown
are elevated, people, especially people sitting on gains,
become jittery, and they hit the sell button," Sarhan said.
 As a result, prices for U.S. government debt rallied, with
safe-haven demand boosting 10-year Treasuries by a full point.
 Higher inventories of copper in LME warehouses also
pressured prices, fanning concerns about sluggish Chinese
demand in the first part of the new year.
 Stocks have risen since mid-December and last rose 1,000 to
446,700 tonnes, the highest level since July 1. <MCU-STOCKS
 China's copper imports are unlikely to surge in April after
a 29.2 percent rise in March since importers are worried about
high stocks in Shanghai. [ID:nL3E7FB1K9]
 Aluminium stocks fell 2,275 tonnes to 4,575,250 tonnes, but
held near a record 4,640,750 tonnes hit on Jan. 20 last year.
 Aluminium CMAL3 closed down $29 at $2,660 a tonne, under
pressure after Alcoa Inc (AA.N), the largest U.S. aluminum
producer, missed Wall Street's first-quarter revenue target.
 "When a company like Alcoa misses revenues during a surge
in commodity prices ... if they can't make money during that
type of environment in the first quarter, what does that mean
for other industries and the rest of the market," Sarhan said.
 Nonetheless, soaring power costs, lucrative bank deals that
keep metal away from the market and strong demand growth are
likely to boost aluminium prices this year. [ID:nLDE72U13F]
 China is considering plans to either scrap or reduce export
tax rebates on some aluminium extrusion products.
 This comes after the metals-consuming giant decided to halt
plans to build new aluminium plants to tackle serious
overcapacity in the industry. [ID:nL3E7FC0WI] and
 Metal Prices at 1806 GMT
 COMEX copper in cents/lb, LME prices in $/T and SHFE prices in
 Metal         Last      Change  Pct Move   End 2010   Ytd Pct
 COMEX Cu      437.90    -8.10     -1.82     444.70     -1.53
 LME Alum      2659.00  -30.00     -1.12    2470.00      7.65
 LME Cu        9622.00  -233.00     -2.36    9600.00      0.23
 LME Lead      2725.00  -130.00     -4.55    2550.00      6.86
 LME Nickel   26700.00   -1005.0    -3.63   24750.00      7.88
 LME Tin      32500.00   -550.00    -1.66   26900.00     20.82
 LME Zinc      2469.00   -76.00     -2.99    2454.00      0.61
 SHFE Alu     16780.00   -100.00    -0.59   16840.00     -0.36
 SHFE Cu*     72310.00   -1060.00   -1.44   71850.00      0.64
 SHFE Zin     18590.00   -215.00    -1.14   19475.00     -4.54
** Benchmark month for COMEX copper
* 3rd contract month for SHFE AL, CU and ZN
SHFE ZN began trading on 26/3/07
  (Additional reporting by Rebekah Curtis in London; editing by
Keiron Henderson and Jeffrey Benkoe)


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